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NRI Services

NRI Account & Banking Advisory

NRI Account Advisory

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SCOPEConfirmed in writing
TYPICAL TIMELINE3–5 days
DOCS REQUIRED1 document

Regulatory Framework

NRIs and OCIs access the Indian banking system through three account categories defined under the Foreign Exchange Management (Deposit) Regulations, 2016: the Non-Resident External (NRE) account, for foreign-earned funds remitted to India, fully repatriable with interest exempt under Section 10(4)(ii) of the Income-tax Act, 1961; the Non-Resident Ordinary (NRO) account, for India-sourced income such as rent, dividends, and pension, where interest is taxable in India with TDS under Section 195; and the Foreign Currency Non-Resident (Bank) — FCNR(B) — account, a foreign-currency term deposit that is fully repatriable with tax-exempt interest on the same basis as NRE deposits.

Moving money out of India from an NRO account, or from the sale proceeds of inherited assets or retirement benefits, is governed by the Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Regulation 4 permits an NRI/OCI to remit up to USD 1,000,000 per financial year from these sources, subject to payment of all applicable Indian taxes. Every such remittance requires a chartered accountant's certificate in Form 15CB, confirming the tax position, and the remitter's own declaration in Form 15CA, filed on the income-tax e-filing portal before the bank will process the transfer.

Choosing the right account for a given income stream, and staying within the USD 1,000,000 annual repatriation ceiling across all eligible remittances in a financial year, are the two most common points of error for NRI clients managing Indian banking relationships.

Our engagement covers account-structuring advice by income type, Form 15CA/15CB certification for each repatriation, and annual tracking of the USD 1,000,000 cap across a client's remittances.

Overview

NRI account advisory covers the bank accounts a non-resident Indian may hold in India under the Foreign Exchange Management Act 1999 and the RBI's regulations — the NRE (Non-Resident External) account for the foreign earnings held in rupees with the free repatriation, the NRO (Non-Resident Ordinary) account for the Indian income with the repatriation limits, and the FCNR (B) account for the foreign currency deposits with the assured interest in the currency. Each account has its own purpose, its own taxation and its own repatriation rules under the FEMA framework.

The NRI account structure is where the non-resident's Indian money is held, and the choice of the account decides the tax and the repatriation of the money. The NRE account carries the tax-free interest and the free repatriation; the NRO account holds the Indian income with the TDS and the limited repatriation; the FCNR (B) holds the foreign currency without the exchange risk. The accounts are governed by the RBI's directions and the Income-tax Act 1961 for the taxation.

The cost of a wrong account structure is the tax and the blocked money: the Indian income parked in the NRE and the repatriation questioned, the foreign earnings in the NRO and the tax paid unnecessarily, the exchange risk on the rupee accounts. The structure is cheap to get right and expensive to change after the money has moved.

This service is for NRIs and their families managing Indian accounts. We assess the income sources and the repatriation needs, structure the NRE, the NRO and the FCNR (B) accounts under the FEMA framework, manage the tax positions of the accounts under the Act, and handle the compliance — the forms, the declarations, the reporting — so the non-resident's Indian money is held and moved correctly.

How It Works

  1. 1

    Residency & Income Mapping

    We map the NRI's residency status, the income sources and the needs.

    Harun Raaj & Associates does this3-5 days
  2. 2

    Account Structure Design

    We design the NRE, the NRO and the FCNR (B) structure.

    Harun Raaj & Associates does this1 week
  3. 3

    Account Setup

    We set up the accounts with the banks under the FEMA framework.

    Harun Raaj & Associates does this1-2 weeks
  4. 4

    Tax & Repatriation Management

    We manage the tax positions and the repatriation of the funds.

    Harun Raaj & Associates does thisAnnual
  5. 5

    Compliance & Reporting

    We handle the forms, the declarations and the reporting.

    Harun Raaj & Associates does thisAs required

Frequently Asked Questions

What is the difference between an NRE, NRO, and FCNR account in terms of repatriation and tax treatment?
Under Schedule 1 of FEMA Notification No. FEMA 5(R)/2016-RB (Foreign Exchange Management (Deposit) Regulations 2016), an NRE (Non-Resident External) account holds foreign earnings converted to INR — the principal and interest are fully repatriable without limit and interest is exempt from Indian income tax under Section 10(4)(ii) of the Income Tax Act 1961. An NRO (Non-Resident Ordinary) account holds India-sourced income (rents, dividends, pensions) — repatriation is permitted up to USD 1 million per financial year under the Liberalised Remittance Scheme analogue for NRIs per RBI Master Direction on Deposits (updated 2024), but TDS is deducted at 30% plus surcharge and cess on interest under Section 195 of the Income Tax Act 1961. An FCNR(B) (Foreign Currency Non-Resident Bank) account holds foreign currency deposits (USD, GBP, EUR, JPY, AUD, CAD) for fixed tenures of 1–5 years — principal and interest are fully repatriable, and interest is also exempt under Section 10(4)(ii) of the Income Tax Act 1961. The choice of account type depends on the source of funds and the repatriation intent.
How much can an NRI repatriate from their NRO account in a year and what documentation is required?
An NRI can repatriate up to USD 1 million per financial year (April–March) from their NRO account under the RBI Master Direction on Non-Resident Ordinary Rupee (NRO) Account, without RBI approval — amounts above USD 1 million require prior RBI approval. To remit funds from an NRO account, the NRI's bank requires: a Form 15CA (undertaking by the remitter) and Form 15CB (CA certificate) as mandated under Rule 37BB of the Income Tax Rules 1962, confirming that applicable taxes have been paid or provided for. The Form 15CB must be obtained from a Chartered Accountant certifying the nature of the remittance, the applicable DTAA provisions (if any), and the TDS deducted. For current income items like rent or interest, only Form 15CA Part D may be sufficient if the amount is below ₹5 lakh, but the bank will specify its own documentation requirement in line with RBI instructions.
Is the interest earned on an NRE savings account taxable in India, and does it need to be disclosed in the ITR?
Interest earned on NRE savings and NRE fixed deposit accounts is exempt from income tax in India under Section 10(4)(ii) of the Income Tax Act 1961, provided the account holder qualifies as a non-resident under Section 6 of the Income Tax Act 1961 during the relevant assessment year. This exemption also covers FCNR(B) account interest under the same provision. Even though the income is exempt, it must be disclosed in the income tax return under the 'Exempt Income' schedule — failure to disclose exempt income can result in scrutiny notices under Section 143(2) of the Income Tax Act 1961. Once an NRI returns to India and becomes a resident, the NRE/FCNR accounts may be converted to RFC (Resident Foreign Currency) accounts, and interest earned post-return to residency is taxable in India for residents under Section 5 of the Income Tax Act 1961.
Can an NRI hold a joint NRE account with a resident Indian family member?
Under FEMA Notification No. FEMA 5(R)/2016-RB (Foreign Exchange Management (Deposit) Regulations 2016), an NRE account can be held jointly with another NRI, or with a resident Indian close relative (as defined under Section 2(77) of the Companies Act 2013) but only on a 'former or survivor' basis — not on a 'joint or either or survivor' basis where the resident can operate the account independently. This means the resident family member can operate the account only in the event of the NRI account holder's death, not during the NRI's lifetime. An NRO account, by contrast, can be held jointly with resident Indians on 'either or survivor' basis. Joint holding of NRE accounts with residents on unrestricted operation terms is a common compliance violation and can attract penalty under Section 13 of the FEMA 1999, which prescribes a penalty of up to three times the amount involved.
When an NRI sells property in India, can the proceeds be credited to an NRE account or only an NRO account?
Sale proceeds of immovable property in India must be credited to the seller's NRO account, not the NRE account — this is prescribed under Rule 4 of the Foreign Exchange Management (Non-Debt Instruments) Rules 2019 read with FEMA Notification No. FEMA 5(R)/2016-RB. Repatriation of the sale proceeds abroad is permitted up to USD 1 million per financial year from the NRO account after payment of applicable capital gains tax (short-term or long-term under Sections 48 and 112A of the Income Tax Act 1961) and submission of Form 15CA and Form 15CB to the authorised dealer bank. For properties acquired before 2003 using funds remitted from abroad, special repatriation provisions under the RBI's 'Repatriation of Assets' circular apply. The repatriation is further restricted to the original cost of acquisition plus improvement costs — any amount above the original foreign currency investment cannot be repatriated as capital; it must be treated as current income repatriation within the USD 1 million ceiling.

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